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  • Writer's pictureJenkins Legal & Advisory

What happens when a sole director or shareholder of a company dies?

Picking the right structure for you is important from the moment you want to start a business. A company structure that involves a single director and shareholder is one of the most common examples in Australia. However, one crucial factor that is often overlooked is what would happen in the event that the sole shareholder and director passes away? Who steps into these roles? The company itself would still need to operate, but without the key individual authorising decisions, running the company, making sure liabilities are met, and expenses and employee’s wages are paid, this could all become an impossible task.

One possible way that this is solved is by section 201F(2) of the Corporations Act 2001 (Cth), which provides that in the event that a sole shareholder and director passes away, the executor of the shareholder’s Will or their personal representative may appoint a new director that has all the same powers of the deceased in running the company.

In the event that there is no valid Will, an application to the Supreme Court by a relative or other person, for Letters of Administration may be commenced to run the estate. Unfortunately, this may take a significant amount of time, during which the business may suffer significantly, and potentially devalue greatly, leaving less for the beneficiaries of the estate.

In short, having a valid Will which properly reflects your wishes, will help preserve your company assets after you die.

Here at Jenkins Legal Services, we specialise in providing our clients with advice on Business and Company Law. The highly qualified Estate Planning team can also help you with your estate planning needs by ensuring that if you are the sole shareholder and director in the company, then the shares in your company are provided to your nominated beneficiary/ies as you wish.


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